Nichola's SME Tax W-update 16 November 2023

Hello,

We have another interesting selection of news, guides, and cases for you this week.

Following the announcements made in the Spring Budget earlier this year, we now know that the proposed modifications to the DIY Housebuilders scheme for VAT will apply from 5 December 2023. Most notably, the deadline to make a VAT reclaim will be extended to six months from completion of the build. It will also become possible to make claims digitally.

These changes will be welcomed by many; the digital submission option should make claims easier to submit and an extended deadline will hopefully mean that fewer DIY housebuilders fail to make an in-time claim at all.

Digital processes appear to be growing in popularity with some taxpayers. We noted that statistics were released this week showing that just over 97,000 taxpayers used HMRC’s app to pay their tax liability between April and September 2023. This is over two-and-a-half times the number that used the app to pay in the same period last year. It will be interesting to see if this trend continues.

The tax tribunals continue to hear a number of High-Income Child Benefit Charge (HICBC) cases. We feature one such case this week, where it was found that HMRC’s discovery assessments were not valid. In this case, the taxpayer had made an appeal prior to 30 June 2021; the key date restricting HMRC’s HICBC discovery powers, which were extended in Finance Act 2022.

Next Wednesday, the Chancellor will present his Autumn Statement. As usual, we will publish detailed coverage and analysis of the announcements made and what they mean, so do keep a close eye on rossmartin.co.uk, from next Wednesday, for everything you need to know.

More news, cases and updates below. Do check out Editor's Choice.

Back soon

The Team

www.rossmartin.co.uk

Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)  

International agreement on crypto tax evaders
The UK, along with 48 other countries, have agreed to the Crypto-Asset Reporting Framework to help combat criminals using cryptoassets to evade and avoid billions in missing tax.

Welsh budget date set for 19 December 2023
The Welsh Parliament has announced that its outline and detailed draft budget will be published on Tuesday 19 December 2023. This will set out the tax, spending, and financing plans for Wales for 2024-25.

LLP property tax planning One-to-Many letters
HMRC have published their latest One-to-Many letters campaign, this time focusing on the use of 'hybrid structures' by some landlords, involving an LLP. This planning was recently featured in HMRC's 'Spotlight 63'. 

Incorporation Relief One-to-Many letters
HMRC will commence a further One-to-Many letter campaign this month, targeted at taxpayers who incorporated their property business in 2017-18 and applied Incorporation Relief on the transfer, for Capital Gains Tax (CGT) purposes. 

Tax Cases

Company could not distribute goodwill it did not own
In Mark Alan Smith & Robert Andrew Corbett v HMRC [2023] TC8977, the First Tier Tribunal (FTT) found that a company did not own the goodwill associated with the business it carried on. HMRC's Income Tax assessment on the purported distribution of the goodwill, by the company, failed. The goodwill was not the company's asset to distribute. 

FTT confirms pre-Wilkes HICBC assessments were invalid
In James Fera v HMRC [2023] TC08986, the First Tier Tribunal (FTT) found that High-Income Child Benefit Charge (HICBC) discovery assessments raised by HMRC were retrospectively protected under Finance Act 2022. The assessments were not valid and the appeal was allowed.

Editor's Choice (subscribers)

Demergers: What are your options?
What are the different types of demergers that are available when you want to reorganise your business? What are the situations where they are typically used?  

Sale of occupational income: Anti-avoidance
UPDATE: What are the tax effects of the anti-avoidance sale of occupational income provisions?  How do you tax a capital sum received on the sale of an individual's earnings? 

Tax Tools 

Tax calculators
FREE for subscribers: We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes. 

Tax Tools
FREE add-on for subscribers, or available separately

Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax significant events.  

Guides & Updates (subscription content)

Self-Employed  

Website and e-commerce costs
What tax relief is there for the costs relating to designing, creating, and maintaining a website, software or e-commerce development?

Losses (sideways): Restriction for uncommercial trades
What is sideways loss relief? What restrictions apply? When do they apply? What is an uncommercial trade?

Employers

Tax-free benefits and perks
What are the top tax-free benefits or 'perks' that can be used to incentivise your staff? How should you structure them? This Practical Tax Checklist is for subscribers.

Directors & Companies 

Pre-trading expenses (companies)
UPDATE: What are pre-trading expenses? What tax relief is available for pre-trading expenses? What are the restrictions to relief? What expenses will not qualify? What about pre-incorporation expenses? 

Stamp Duty: Share-for-share exchanges
How do you calculate Stamp Duty on a share-for-share exchange? What relief is available from Stamp Duty on a share-for-share exchange? 

Groups
What qualifies as a group for tax? How do you form a group? Which definition of a group applies to different types of tax? What are the benefits of being in a group?

Private Client & Estate Planning

Investment bonds & tax
UPDATE: How are investment bonds taxed? What is an investment bond? What is a chargeable event gain and how is it calculated? How do notional tax credits work? How is top-slicing relief calculated? What is deficiency relief?

Rectification of Trustee mistakes
What happens when trustees make mistakes? Can the court rectify them? When will they agree to rectification?

Land & Property

Rent-a-room Relief
What is rent-a-room relief? When does it apply? What are the limits and restrictions?

Replacement of Domestic Items Relief
What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met?  

Buy-to-let ownership: personal v. company?
What is the most tax-efficient way to own buy-to-let property? Personally or via a company? What are the income and Corporation Tax, CGT, IHT, ATED, SDLT or VAT issues? With tips on profit extraction and other planning points, case studies and links to further guidance.

Overseas & Residence

Remittance basis (overseas income)
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?

Capital Allowances

Full expensing & First Year Allowances
UPDATE: What is full expensing? When does it apply and what is the rate of allowance? How are disposals of full expensing assets dealt with? What assets qualify for the 50% First Year Allowance (FYA)? How do I deal with disposals of 50% FYA assets? How do I make a claim?

Super-deduction & First Year Allowances
UPDATE: What is the Super-deduction? When does it apply and what is the rate of allowance? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed? What happens when an accounting period straddles 1 April 2023? 

Investigations & Enquiries

Named tax avoidance schemes, promoters, enablers
UPDATE: HMRC publishes a list of Named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes, as HMRC does not consider that they work and you may end up with a significant tax liability if you engage with the scheme suppliers.

Making a tax disclosure (Digital Disclosure Service)
How to disclose errors or mistakes in direct taxes and notify HMRC of an under-assessment. A practical guide to making a tax disclosure using HMRC's online system. 

VAT News & Cases

VAT DIY housebuilders scheme changes
A number of changes to the VAT DIY housebuilders scheme come into effect on 5 December 2023. The claim deadline is extended to six months and digital claims will become possible. 

Pharmaceutical company’s bitter VAT pill to swallow
In Piramal Healthcare UK Limited v HMRC [2023] TC08966, the First Tier Tribunal (FTT) found that a company importing pharmaceutical goods to the UK could not recover the associated import VAT. The goods had not been used as a cost component in an onward supply.

Staff, Bureaux or Agencies and VAT
What are the VAT issues when an employer supplies services to an employee or vice versa?

Sport and physical recreation
When does the VAT exemption apply to sport? What is an eligible body for the VAT exemption? What is a sport?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Corporation Tax Part 1: Rates and Challenges
• NEW: CPD: Corporation Tax Part 2 Associated Companies
• NEW: CPD: Corporation Tax Part 3 Augmented Profits & Marginal Relief
• CPD: Landlords Update 2023

More at CPD Index

CPD Workouts

Two hours of CPD: Unravelling the diverse tax rules over a range of topical subjects

• VtaxP Tax Workouts 2023: AML Essentials update & IHT and Family Investment Company case studies
• VtaxP Tax Workouts 2023: Tax Update for OMBs & Taxing the Digital Nomad

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.  

Missed Last Time's Web-update?

Nichola's SME Tax W-update 9 November 2023

• Scottish budget date set for 19 December 2023 
• Change in guidance highlights HMRC R&D error 
• Constructive trust prevented CGT liability 
• No CGT deduction for referral & project management fees
• Tax Avoidance not main purpose of restructuring 
• Windfarm study costs not incurred on the provision of plant 
• Registering for VAT UPDATE
• Dividend tax UPDATE
• Gift Aid UPDATE
• Private Client CPD: What’s on? November 2023 NEW
• Directors: Tax planning toolkit for 2023/24
• Basis Period reform
• Employers' NICs allowance
• Employee Ownership Trusts: An exit route for owner-managers
• Property profits & losses: Toolkit (2023-24) ...More

Come and join our Cloud

Subscribe and UNLOCK the whole site. A single-user annual subscription is £519 (+ VAT) or pay in 12 monthly instalments of £50 (+ VAT). All subscriptions are for a 12-month term.

What do you get?

• We keep YOU up to date in SME tax.
• FULL access to www.rossmartin.co.uk: your firm's favourite TAX INTRANET containing over 5,000 actively maintained tax guides, briefings, toolkits and checklists.
• Want to know more? Commission your own articles and checklists.
• Structured CPD our detailed SME tax updates written for Advisers provide topical summaries and planning notes and our webcasts provide you with structured CPD at your desk.
• Regular client tax briefings: these cover the latest business and employment tax issues and are designed to assist you, plan meetings and improve your client services.